Biden floats corporate minimum tax in lieu of rate increase for bipartisan deal

By Doug Connolly, MNE Tax

To close a bipartisan infrastructure deal, President Biden suggested to a key Republican negotiator that he would consider forgoing his proposed corporate tax rate increase if Republicans would agree to a new corporate minimum tax of 15%, White House Press Secretary Jen Psaki confirmed June 3.

Biden floated the potential compromise in a meeting on June 2 with Senator Shelley Moore Capito (R-W.Va.), head Republican negotiator for infrastructure bill talks.

The President’s corporate tax plan, part of the pay-for portion for his infrastructure plan, proposes to increase the corporate tax rate from 21% to 28%. Republicans had cut the corporate tax rate to 21% from 35% in their 2017 tax reform and have balked at the idea of undoing one of their signature achievements under the Trump presidency.

The discussions with Capito indicate that Biden is willing to compromise on the corporate tax rate increase for purposes of the infrastructure bill, though the President still seems focused on some means of increasing corporate tax revenue to pay for the legislation.

The President’s corporate tax proposals, detailed in the Green Book, include a 15% minimum tax on the worldwide book income of large corporations (those with worldwide book income of more than USD 2 billion). This book-income minimum tax proposal is intended to pull in more revenue from large corporations that report substantial profits to shareholders while paying little or no tax.

Psaki noted that the book minimum tax is a new idea that does not undo anything in the Republicans’ 2017 tax reform, so the President is interested in Republicans’ openness to it.

“What happened over the last couple of days and also in the meeting yesterday,” Psaki said, “is that the President did a thorough review of all of the tax reforms he’s proposed … and he looked to see, what could be a path forward with his Republican colleagues on this specific negotiation?”

However, Psaki added that Biden has “absolutely not” abandoned his plan to raise the corporate rate to 28%. She suggested that the President will continue to look at raising the corporate rate as a pay-for, potentially for something other than infrastructure.

Addressing declining corporate tax revenue has been a central element of Biden’s corporate tax plans, but he has also campaigned on being able to reach across the aisle and broker bipartisan deals. It remains to be seen if this offer garners any Republican allies for such a deal.